An example might be complying with food and alcohol law in a single region, which you would never see unless you lived there. Another example might be a complete experimentally gated refactor that shaves 1 second off loading time. A lot of effort would go into simply making sure the change can be turned off, and verifying with unit tests, which takes time and effort.
These projects might be pointless on a small app, but in a large business might be worth millions to the company.
Another aspect is your changes often have to be approved by a lot of people, which is not the case on small projects. Your projects are also analyzed by data scientists, to make sure they're not harming the business - and if they are, your work might be thrown out, which contributes to even less visible change to outsiders.
All of these in concert slow things down, and necessitate staff.
Why that is the case in every business, I haven't been able to figure out. I suspect it's because when businesses reach that size, the efficient market effects become greatly overstated in the short term, so these businesses naturally acquire a lot of fat.
One piece of evidence for this is that private equity exists. You can buy a business, fire a quarter of the people, then sell it and make a lot of money without hurting the operations at all.
Corona spoke up and pointed out the Emperor had no clothes.
So you need more engineers because you hired more middle managers?
That's a little absurd in my opinion but I am likely wrong in this assumption.
It just seems like the reaction to "We have lots of approvals" should be figuring out how to reduce the amount of approvals needed, not hiring more engineers to increase velocity.
Surprisingly, or hopefully not, the vast majority of the company is more directly revenue generating; sales and customer acquisition. Its spread very globally; at least as of a few years ago, the SF HQ didn't house any sales people, though I think they had an office in Oakland which did.
Point being, I always got the impression that their engineering team was very "right sized" given their revenue and product scope.
http://d18rn0p25nwr6d.cloudfront.net/CIK-0001345016/360caaf2...
Page 5: "Our sales force consisted of 3,844 employees as of December 31, 2019..."
Page 12: "As of December 31, 2019, we had 5,950 employees globally."
For example, just one marketing VP with a salary of $120,000 could have an advertising spend budget of a few million.
But in Yelp's specific case, they do have a ton of sales/customer service people who most definitely are among the first to go, along with engineers who are working on projects that are not related to keeping the website from 404ing
Even most programmers -- who are well aware of the hidden complexity of the products they themselves work on -- usually seem to believe that this must not hold true for the products of other companies.
For every feature you're aware of on a random consumer tech product or service, there are probably ten or twenty more that don't concern you, that you haven't seen, or that you don't care about.
It begins innocuously enough. It takes just one or two mid-level manager empire-builders to join the company. Thanks to the funding, the product and business want growth at all cost which means everything needs to be built and launched yesterday. The engineering-managers say well sure, I need 100 engineers. And so the game begins; the early empire-builders get promoted to dizzy heights.
It doesn't take much time for others to take notice that they need to build an empire to get promoted and every mid-level manager is hiring like there's no tomorrow. In no time you have an incredibly bloated org. In this environment not building an empire is not an option; teams with fewer than 10 members don't get new-shiny projects and are brutally sidelined.
[1] I've been on both sides. The start-up I was working in got acquired by a behemoth that had skilled empire-builders. My team got massacred. In my next gig I had learned my lessons so hired like crazy and in no time had 40 engineers reporting (direct/indirectly) to me 15 of whom had any real work to do. The rest were building random CRUD apps. In the end, realized that empire-building is not for me; I enjoy running a small tight knight team producing high throughput and impactful work.
More generally, it's kind of amazing that any company with 178 million unique "customers" only has a few thousand people working there. I know this is the norm nowadays due to the power of computers and the Internet, but I imagine how many people would have been employed to perform the same tasks fifty years ago and suspect it would have been three orders of magnitude higher (and completely uneconomical to do).
Progress is a pretty impressive thing.
I know you're not saying this, but I'd caution anyone against saying things like "<company>'s product is just a glorified <something simple>". It's very hard for people not working directly on a product to truly understand its complexity and everything that goes into it.
EDIT: here's where I read that https://danluu.com/sounds-easy/
I'm sure the Owner of Botto Bistro [1] is having a proper side-splitting laugh right about now hearing this news given all he [2] has gone through.
In short: they have 6000 because that's what leadership thought they could afford. Obviously a 10-year bull market leading up to the current lockdown situation puts them in a rough spot.
There is this canon dogma about 'market efficiency keeping things lean and fit', which is so obviously false and disproven by every single Corp out there, and yet is allowed to stand. Curious.
Yelp's business model requires a lot of cold calls to small businesses.
Honest question - is it normal to announce layoffs publicly before telling the affected employees? I guess I can understand it from a PR perspective, but it must be awful to read that and sit around waiting to find out if you're affected.
Why do people do this? What do they get out of it? They don't pay for tip-offs do they? Seems unethical anyway.
For other commenters asking about the workforce: Yelp has an army of salespeople because they have to sell to so many small businesses. What they do is frankly amazing to me. I used to sit on the sales floor sometimes to experience the excitement. It seems like they'd be the most affected, and I hope they fare well. [Source: used to work there in engineering]
Compare to the way things were done in the early 80's when the same industry was new at this, they did it as a "surprise" all at once, hustling people out the door and people don't have any time to exchange email addresses with coworkers, etc.
Of course, if you're not offering any severance package, then you have more of an incentive to do things the wrong way...
Companies like this always start with a noble purpose, before the pressure to monetize causes them to ruin what was once a valuable service.
There is zero physical evidence that Yelp does or ever did this. The only thing that Yelp ever did was move one positive review to the top of the page for advertisers, and I'm pretty sure they abandoned that practice a long time ago.
It's pretty obvious to me that unsophisticated business owners are simply drawing false inferences when they receive a sales call and then receive a negative review. Confirmation bias at work.
Here's an old Hacker News comment that seems to me to probably be close to reality: https://news.ycombinator.com/item?id=1149078
If they're doing that, then you know that the end goal is ads, ads, ads.
I agree that no one is entitled to positive promotion, but to argue that a massive platform that's established itself as the go-to place for consumer business reviews absolutely should be held to fair promotion.
I can't believe that this an argument on HN. You're saying that if you had a small business with a Yelp profile and I found your identity and started posting false negative reviews on your business profile, you'd have no problem being called by a Yelp rep to pay money to make them go away?
If Yelp is in trouble, maybe their quality should get another look.
Google, Facebook, Amazon, etc.
Hell, maybe you can argue Netflix's algorithms have taken a turn for the worse, but to their credit Netflix is the only FAANG+ company (not that Yelp is in this bucket) which really hasn't "gotten evil" over time
I know a few friends that work for a major retail company that have been furloughed. Those will definitely turn to layoffs if this keeps going too much longer.
They will prominently display ads containing positive reviews for competitors on a business's page unless that business pays Yelp.
Take SEO for example, it's not just putting H1 and title tags on every page. You most likely have dedicated services that are generating millions of sitemaps, daily. You probably have separate infrastructure dedicated to serving the crawlers so that you can optimize the content and aren't serving your users and bots from the same pool of resources. You have analytics dedicated to monitoring the crawlers and running tests / adjustments as you see results. You likely have services that generate the SEO data for every page (meta tags, titles, canonical links, headings, etc). And in addition to this you have AB testing, legacy systems, and technical debt to deal with.
My point is, it's easy to brush these things off as unnecessary and large company waste (and some of it might be) but to say things like "It's just a CRUD app, why do they need a 1000 engineers. I could do it with 10" is ignoring the vast complexity involved in running at scale.
https://tech.slashdot.org/story/18/01/10/1728222/yelp-accuse...
Now that uncertainty is going down as we understand it all better, have more data, have plans in place, the economy is recovering to a more accurate, "this is actually what this whole ordeal will cost us"
When there's so much stupid money being pumped into the system, why would the fundamentals, like unemployment, lack of consumer demand, gdp contraction, expected dividends, etc, etc, matter?
We could all be out of work, trading bottlecaps for packets of ramen for the next year, but as long as the fed keeps printing a million dollars for every 3 unemployment claims, the markets will be soaring.
(I should point out that because the USD is a world reserve currency, and has very large amounts of it in circulation, this won't even result in hyperinflation.)
Spot price does nothing to measure uncertainty. Volatility is still very high which means, by definition, we are in an uncertain market.
A much better explanation for the dow rising is the opposite of what you propose: we don't really know how this will impact things so it's very hard to price all of this in. Investors already known that unemployment claims this week would be awful so that information is already priced in, but we're still really waiting on information about how all of these impacts will impact businesses as a whole.
I mean, one very straightforward interpretation of the headline of this linked article is that Yelp will be seeing a 30-40% shortfall in revenue for the medium term future (i.e. long enough to make the firing and hiring process worthwhile). At its worst, the market was guessing at a 38% drop in valuation, and it's now recovered significantly from that.
My guess, and no I'm not buying puts to test it, is that we're going to see another series of shocks to the market when the revenue numbers start being reported and the big employers start running out of money and shutting things down.
Right now the immediate job losses are all in the service sector and small employers, and those jobs are basically invisible to your typical trader bro.
I don't think anyone really understands how bad things are, and the only reason fears have abated is because everyone is operating under the assumption that the country will "open back up" later this month or next month, and things will largely go back to normal in the summer. Once that sentiment erodes and reality sinks in, we can expect the stock market to sink with it.
It happens all the time during sell out (1929, 2008). At some point shorts close their positions en masse. It doesn't stop the market from falling further later...
https://www.marketwatch.com/story/heres-how-big-of-a-bear-ma...
1) pricing in the return of US manufacturing. In a pandemic, it's every country for themselves. We've outsourced items critical for national sovereignty and the ability to respond to crises. I think left and right agrees now, that's a risk which needs to be mitigated.
2) govt has unprecedented support, in terms of small business loans and benefits
3) bonds and stocks are usually inversely correlated, they are not because the fed is buying up a significant portion of the debt, at low rates. Meaning your not getting much return if you hold bonds.
4) Capital flight from foreign markets. If you can't trust China, and emerging markets are going to get hit worse, then the US is where you want your money.
5) Less uncertainty.
6) More speculation that this virus is not as bad as we think. We're well below the expected deaths on the models, which means the models are wrong, by a factor of multiples.
The divide between big and small business in this scenario is stark. For companies that have access to bond markets and the stock market massive amounts of cash are being deployed to prop things up.
Small businesses are in complete free fall, with a non-functional short term confusing payroll assistance loan plan that has yet to lend to anyone in effect.
The writing is very clearly on the wall. Hundreds of thousands of small businesses will fail, and that will further tip market share towards larger companies, conglomerates, chains, and similar.
When you invest in the stock market you are investing in those larger businesses.
So, despite what you may naturally think, the market crash wasn't reflecting the fact many people aren't working right now, it was reflecting the fear that we could be knocked out for months. Now fears about the worst-case scenario are receding, so the time-averaged result rises as the result of the worst bottom elements lifting, even if the overall assessment is still problematic.
I'm also surprised because I'd expect stocks to tank because that's what would make economic sense to me. People at home, not spending money, unemployment soaring. So far I'd assume this situation has more of an impact on the actual economy than the financial crisis but the market seems to disagree.
I guess the lesson here is that FED meddling/cheap money trumps all other factors. But that would mean eventually things should crash really fast.
The best lesson from "The Alchemy of Finance" (my favorite investment book) is that the market just represents the current bias, not the true situation but eventually converges to the true situation. That's subtle but hard to grasp. At least it was for me. Or in other words...what makes economic sense isn't necessarily reflected in the current market prices (as the efficient market hypothesis would suggest).
1.) The gov has shown they aren't willing to let the market tank.
2.) Many businesses are actually thriving right now via online orders. This means every part of their associated supply chains are thriving as well.
3.) This is a temporary revenue setback but will make it socially acceptable to layoff employees by the thousands...which will trim payrolls without losing an equivalent amount of production.
4.) Non-retired people wouldn't dare touch their 401k before they are 59 1/2, which are primarily comprised of stocks.
5.) The market is predicting a surge of activity once this is all over.
6.) This situation shook out any major bubbles that were forming (e.g. stock buybacks), and made the market more anti-fragile.
7.) People now see the value of having more goods on hand in their homes, which will probably mean increased initial spending when this is over.
Governments all over the world have implemented financial relief to these companies by promising to shoulder the cost of wages through the normal unemployment benefit system. Companies taking advantage of that during this extraordinary period doesn't say much about what their profitability will look like after the lockdowns are over.
In fact, in some cases this could be evidence of a flexible company that is able to scale down quickly and is more likely to survive this and future demand shocks.
Meaning it's not as bad as we all thought in previous weeks when millions were predicted to die
This often seems counter-intuitive but is pretty simple to understand if you keep in mind that markets are always forward looking. For instance, if Company A typically makes $1m in profits each year, you can ascribe a value to it. However, if at some point, you suspect that their profit is going to drop 80%, you are going to devalue their stock accordingly. However, if the company announces that their profit "only" dropped by 60%, you have likely undervalued them (since you thought it would be worse) and it makes sense for you to increase their price.
So to get back to your initial question, the answer is the market thinks, right now, that things will not be as bad as they initially assessed.
- Some of it is inflationary as others have pointed out. There's a lot of money entering the system right now, and markets tend to go up on that
- Some of it is short sellers realizing gains from the last month and exiting their trades (the effect of closing a short causes markets to rise)
- Some of it is psychological reactions to dropping death estimates, and concurrent optimism that things will go back to "normal" soon (or at least sooner than previously thought)
What the market did 12/21/18 is sort of irrelevant
Everybody realizes it should adjust to some new value to reflect the new reality. But nobody knows what that value is. So nobody is sure if the market has adjusted too far or not enough.
So any time any new information comes in, people grasp at straws trying to make sense of the situation (and/or decide they have to act despite very limited information), and the market goes up and down.
It doesn't just move smoothly in one direction and then gradually come to a stop once it finally reaches the new "correct"(-ish) value. It jerks back and forth as it gets there. So even when down is the inevitable direction, it's going to have a few ups mixed in.
So apparently the fed announced more financial measures. Which might cause some optimism. Also rumour has it there is a chance that the oil 'crisis' will be solved.
Also investors might be short sighted and think this will only take a few months. Who knows.
To me it feels totally incorrect, reading all the other news would mean stocks should go down. This crisis is a bit different though, it is not a financial crisis, which takes a while until it hits the real economy. I think nobody is entirely sure what is happening.
...and the stocks are green.
Most the bottom hunters are only following the Covid news. Oil prices are adding to the stock market swings big time.
Virtual meeting started around 10am EST.
But yeah tbh no one really knows
market effects of the underlying securities themselves. Supply and demand of actual stocks can affect price
The biggest one is a short squeeze
That's easy: the market is betting the "help" is another mass wealth transfer from the bottom half of the population to the top half of the population. This happened every time we had a crisis. Why would a rational investor thing it would be different this time?
Trump is desperate to not let the markets drop as part of his legacy, and the fed is doing everything in their power to not let the markets drop... Regardless of the long-term consequences. This is, of course, purely a coincidence.
That's why you can have 16 million unemployed in two weeks, another two months of shutdown on the horizon, nobody buying anything, everyone sitting at home, landlords not getting paid, and yet have the market partying like it's 999.
You measure one with the other.
Here's a long term graph of the Feds balance sheet: https://www.ft.com/content/ec10b41a-84af-4e44-ad3f-5bb86b6e1...
Here's the Australian Central Bank's current balance sheet: https://i.redd.it/h7bdffj8gqr41.png
This is playing out across the planet and will likely have the same market distorting effects as a decade ago.
Anecdotally, retail investors also appear to be buying the dip in volume, though we need more recent fund flows data to see if reality reflects anecdotes.
